Netflix was the poster child of technological “disruption” when it first rolled out its video streaming app. For less than $10 a month, users could watch any movies or TV shows they wanted from a vast library that seemed unrestricted by production company or brand.
Netflix built an empire that media companies everywhere admired — and eventually, wanted to copy.
A handful of competitors, including Hulu and Amazon Prime, have emerged to threaten some of Netflix’s market share, but even more competitors are coming — and the landscape is becoming more aggressive.
For example, Disney is planning to launch Disney Plus later this year and taking all its Disney core, Star Wars, and Marvel branded franchises with it. AT&T, Facebook, Apple, and Viacom are all planning to launch services of their own, presumably hoarding whatever media properties they can get their hands on and producing new content to dominate even more exclusive content.
This has led to a phenomenon increasingly being referred to as the “streaming wars,” and consumers are going to have to start making some hard choices.
The Streaming Wars
For many years, cable was the go-to choice to have practically unlimited content options. Though it’s possible to find a competitively priced cable service in your area, some plans were ridiculously expensive and complex to maintain. Streaming in the early days of Netflix was a low-cost, all-in-one alternative.
But in the years to come, each streaming app will presumably offer a basket of original exclusives, and not much else.
If a consumer wants access to all of the best-reviewed movies and TV shows of a given timeframe, they’ll have no choice but to subscribe to many different streaming apps simultaneously. Even at the low rate of $10 per month, per subscription, this can quickly spiral out of control, making users pay an egregious sum of money and manage dozens of different subscriptions.
Ultimately, this increased competition will undermine two of the biggest advantages streaming had in the first place: low prices and user convenience. How will users react when confronted with an industry whose biggest advantages have been reversed?
Few users will be willing to subscribe to every streaming app. But if they want access to the latest and greatest content, they’ll have to make a decision.
This could mean:
- Increased piracy. There’s already evidence to suggest that the rise of new streaming services is leading to an increase in media piracy. Content pirates took a break from illegally distributing content (for free) when there was a single, low-cost way to watch the content they wanted. Now that the costs are rising and the selection is becoming more limited, users are resorting to piracy to meet their content desires. If pushed far enough, it could end up stifling the revenue available to the entire industry.
- A return to cable TV. Cable companies have been well aware of the threat that streaming services have presented. That’s why they’ve come up with inventive alternatives, including streaming services and new content packages designed to make things less expensive and more convenient for customers. If streaming services continue to look less and less appealing, customers might start going back to their cable providers.
- Silos. Clusters of customers may choose to stick with one company due to being a loyal subscriber for years, or because they disproportionately favor one or two original series from that brand. Over time, this can lead to a kind of “siloing” effect, where some customers are wholly unaware of original content produced by other brands. These silos could end up segmented by area, by demographic, or by less obvious factors.
Room for Disruption
There is significant room for disruption in this new streaming model.
The streaming wars are going to be good for the individual media companies competing for a slice of the pie — after all, many of them will be generating revenue from streaming for the first time, which is almost automatically a net positive — but bad for the streaming industry as a whole. Customers are going to be faced with more aggressive competitors and stratified competition, as well as higher prices for a narrower selection of content choices. This kind of strife is exactly what typically opens the door to a truly novel competitor — something new that defies expectations and wins the market share.
Startup entrepreneurs and innovators are already brainstorming how to take advantage of this.
It could be a “best of” app that neutrally consolidates the best original series from each streaming service, or a “pay as you go” plan that allows you to only pay for the TV shows or movies you watch, regardless of which platform you’re using. In any case, the industry’s about to get more complicated.
Larry Alton is a professional blogger, writer, and researcher. A graduate of Iowa State University, he's now a full-time freelance writer and business consultant.Currently, Larry writes for Entrepreneur.com, Inc.com, and Forbes.com, among others. In addition to journalism, technical writing and in-depth research, he’s also active in his community and spends weekends volunteering with a local non-profit literacy organization and rock climbing. Follow him on Twitter (@LarryAlton3), at LinkedIn.com/in/larryalton, and on his website, LarryAlton.com. To read more of his reports — Click Here Now.
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